In bolting on a sponsor-supported tier, the Hollywood giant not only is focusing on subscriber acquisition but improving profit margins while also doing something its advertising partners have long coveted.
In some ways, the move was the culmination of robust debate internally at Disney that had been happening on and off for years. On its November 2017 earnings call, two years before Disney+ launched, then-CEO Bob Iger revealed that the company was “not planning to sell ads on the Disney service,” specifically referring to interruptive commercial breaks.
And then, earlier this March, the company changed its tune, announcing that Disney+ would get a cheaper, ad-supported tier later this year, with international markets to follow in 2023. Disney+ joins a crowded field of ad-supported streaming platforms, both subscription offerings like Paramount+, Peacock, Hulu and HBO Max, but also free offerings from the likes of Tubi and Pluto.
A source at a media buying firm with clients that buy on Hulu and Disney’s linear channels confirms tothat there has been significant interest expressed to the company in reaching Disney+ subscribers, particularly on the Marvel and Star Wars original series such as. Executives at the company say the move was made to get ahead of pitch meetings tied to Disney’s 2022 upfront, which will be held at New York’s Pier 36 on May 17, when Disney+ is expected to be a hot topic.
It’s safe to say that Disney+ can expect similar performance, especially with Disney unifying the company’s ad sales division, having the same team sell Disney’s linear channels and streaming services, and with automation making it easier for buyers to buy ads across platforms in one click. Still, there is no question the move is a significant pivot for Disney, which has until now resisted the temptation to bring advertising to its flagship streaming service.“When you look at the Disney brand, the Disney+ product, we have a very high volume of films on our service,” McCarthy added. “And we don’t believe that the consumer experience would be a particularly good one if we had advertising on Disney+.
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